Telenor reports profits boosted by Asian growth

OSLO: Norwegian telecoms operator Telenor reported on Wednesday sharply raised profits thanks to growth in its Asian markets, but saw difficulties in two of its most important markets Russia and India.

In the first quarter, Telenor posted a net profit up 169 percent from the equivalent figure last year to 2.8 billion kroner (356.1 million euros, $530.3 million) while analysts surveyed by Dow Jones Newswires expected 2.9 billion.

‘The Asian operations were the main contributors to subscriber and revenue growth,’ Telenor said

During the last quarter, the operator gained some 9.0 million subscribers worldwide and its sales grew 7.8 percent to 24.1 billion kroner.

The company's own Northern European domestic market meanwhile stagnated.

‘In Norway and Denmark, there is increased price competition and more comprehensive measures on cost reductions are required,’ chief executive Jon Fredrik Baksaas said.

Telenor maintained its expectations for the year, with an earnings before taxes, depreciation, and amortisation (EBITDA) margin of about 31 percent and organic growth ‘of more than 5.0 percent.’

In Russia, Telenor saw its ownership in its subsidiary Vimpelcom heavily diluted after its purchase of Wind Telecom, which Telenor opposed but Vimpelcom's other large shareholder, Russia's Alpha, wanted.

Baksaas said Telenor would ‘continue to work in the best interest of Vimpelcom,’ but in light of its diminished influence analysts have even suggested the company disengage itself from the operator specialised in emerging markets.

In the highly competitive India market, where Telenor is present through its Uninor subsidiary, the company fears being negatively affected by a scandal on the sale of mobile licences which sent former Telecommunications Minister A. Raja to prison.

Telenor's partner in Uninor, India's Unitech Wireless, is one of the operators which is thought to have snagged licences at a bargain price thanks to Raja in 2008.

The Norwegian company stressed it came to India after the alleged fraud took place, but fears its subsidiary's licences could be revoked, which would send a blow to its costly expansion strategy in the country.